Air India has a burden of huge debt around its neck. As per reports, the amount of the total debt of Rs 55,000 crore at the end of March 31, 2018, has risen to a total of Rs 58, 351.93 crores at the end of March 31, 2019. The debt comprises of both the working capital debt and aircraft-related debt. Air India's financial situation remains grim as the government moves towards the divestment process and plans to sell its entire stake in the national carrier. Recently, many pilots also handed over their resignation letter to Air India.
AIAHL to Come to Air India’s Rescue
Air India has had special help from the government formed Air India Assets Holding Ltd (AIAHL) for easing the burden of debt on its shoulders. It was obtained from one of the senior airline official who asked not to be named that AIAHL has made plans to issue government-guaranteed bonds later this week to raise Rs 8,064 crore. It is said that the money raised will be used to pay back a portion of the debt.
Shifting of Debt from the Balance Sheet to AIAHL
The reason behind the fundraiser is to support the plan of Air India which seeks to transfer a total of Rs 29,464 crore amount of debt from its balance sheet to that of AIAHL. It will certainly make the life of Air India easier since their monthly interest expenses would be cut by approximately Rs 2,600 crore from November 1, 2019. The liability will shift from Air India’s balance sheet to AIAHL.
AIAHL was set in February this year and so far it has raised about Rs 14,000 crore by issuing government-guaranteed bonds. One thing to note is that Air India has already shifted around Rs 7,400 crore with the help of non-convertible debentures which were issued way back in 2012 to AIAHL with the support of novation.